Business

Why rupee tanked to historic low?

Published

2 years ago

Farwa

The Pakistani rupee lost over Rs14, or 5%, against the US dollar in the outgoing week as the cash-strapped economy spirals deeper into a financial crisis amid challenges like looming debt default, shortage of dollars, unsustainable spending, uncontrolled inflation, and nine-year low foreign reserves.

Earlier during the week, the local unit advanced from a record low as the International Monetary Fund (IMF) team began negotiations with Pakistan over the resumption of its $6.5 billion bailout programme; however, Prime Minister Shehbaz Sharif’s rather concerning comments regarding the ongoing parleys sent the currency market reeling.

The PM on Friday said the Fund review mission was giving Finance Minister Ishaq Dar and his team a “very tough time” in the talks — expected to conclude on February 9.

Following his comments, the market panicked and the rupee devalued by 1.89% (or Rs5.22) to a new all-time low of Rs276.58 against the US dollar on Friday compared to Thursday’s close of Rs271.38.

Cumulatively, the rupee slumped 3.14% (or Rs8.69) in three days, compared to Wednesday’s close of Rs267.89 — the rupee recovered as crucial talks with the Washington-based lender resumed.

Tresmark, in its weekly currency commentary, noted that the rupee fell sharply last week from 264 per dollar to 278.50.

“It seemed to have stabilised around the 270 level, until the prime minister and finance minister spoke out,” the financial terminal for real-time market rates, news, charts, financial data, and technical analysis stated.

It added that when PM Shehbaz said that the IMF was imposing harsh conditions and when the finance czar said they were looking for philanthropists for billions of dollars, “traders assumed that the leadership was still looking for avenues other than IMF or that they would waste more time in negotiating with them.”

“However, in our assessment, the premier may have been only trying to prepare other stakeholders and vote base for harsh steps and measures,” Tresmark said, adding that another important factor behind the rupee’s downfall was the steep decline in total reserves of the country which are now at $8.7 billion (down by $712 million).

PM Shehbaz is battling to keep the economy afloat amid dollar shortages, and political tensions deepen.

Pakistan — with a $350 billion economy — is seeking a crucial instalment of $1.1 billion from the lender of the last resort to avoid default.

Tresmark mentioned that until and unless traders don’t feel confident about things getting better, especially the situation of reserves, the rupee would continue to fall, irrespective of its level.

“Traders we spoke to think the first and second level of resistance of 280 per dollar and 285 per dollar will be breached in the coming week unless the IMF comes on board. They also feel that 270-275 per dollar is the fair level post-IMF agreement, and any outruns will be temporary and will get corrected once there is some visibility of inflow,” the commentary read.

Business

The amount of trade between Saudi Arabia and Pakistan hits $700 million.

Published

19 hours ago

Farwa

Through the Special Investment Facilitation Council (SIFC), Pakistan’s trade connections with Saudi Arabia have grown significantly, with bilateral trade volume rising from $546 million to $700 million and exports to the Kingdom growing by 22%.

As bilateral economic cooperation continues to grow, Saudi investors have shown a strong interest in Pakistan’s construction, energy, agricultural, and information technology sectors. The objective for exporting IT services between the two countries has been raised from $50 million to $100 million.

Saudi Arabia has set up a help desk dedicated to making it easier for Pakistani IT companies to register in the Kingdom in order to expedite commercial procedures. The goal of this program is to speed up economic collaborations between the two countries and lower administrative barriers.

The well-known Saudi restaurant chain AlBaik has revealed plans to open locations in Pakistan, which is a big step for the food service industry and should lead to the creation of new job possibilities in the area.

Officials have noted that stronger business links between the two countries lead to greater economic stability, and the SIFC has played a crucial role in promoting these trade advancements. For bilateral trade and investment projects, the Council remains a crucial facilitator.

According to a trade official with knowledge of the developments, “the establishment of dedicated support mechanisms, such as the help desk for IT companies, demonstrates a commitment to long-term economic partnership,” The goal of these programs is to improve the conditions for commercial collaboration between the two nations.

The increasing amount of trade and the diversity of investment sectors show that Saudi Arabia and Pakistan’s economic ties are changing as both countries seek to deepen their business alliances in a number of industries.

Business

After more than 50 years, Bangladesh and Pakistan resume direct trade.

Published

19 hours ago

Farwa

After more than 50 years, the two governments will resume direct bilateral trade, with Bangladesh’s food ministry announcing Sunday that it will receive a supply of 25,000 tonnes of rice from Pakistan next month.

After former Prime Minister Sheikh Hasina was overthrown last August, relations between Bangladesh and Pakistan have begun to improve after decades of tense relations.

Since then, there have been increased bilateral interactions between Bangladesh and Pakistan. Nobel laureate Muhammad Yunus, the interim government’s senior adviser, has met twice with Pakistani Prime Minister Shehbaz Sharif.

According to the food ministry, Dhaka completed an agreement earlier this month to import grains from Pakistan.

“On March 3, the first shipment of 25,000 tonnes will reach Bangladesh,” Zia Uddin Ahmed, a ministry assistant secretary, told Arab News.

“This is the first time that Bangladesh has started importing rice from Pakistan at the government-to-government level since 1971.”

Following direct maritime contact between the two South Asian countries in November—a Pakistani cargo ship stopped in Bangladesh for the first time since 1971 with imports and exports arranged by private companies—their trade relations grew.

Resuming trade with Pakistan is a significant step for Bangladesh, according to Amena Mohsin, a lecturer at North South University and a specialist in international relations.

“We want to see progress in our bilateral relationship with Pakistan. Most significantly, we are currently going through a low point dispute with India, even though we constantly diversify our partnerships.

This most recent move to purchase rice from Pakistan is really significant in this context,” she told Arab News.

Business

The total amount of Pakistan’s liquid foreign reserves is $15.95 billion.

Published

4 days ago

Farwa

As of February 14, Pakistan’s total liquid foreign reserves were $15,947.9 million, with the State Bank of Pakistan’s (SBP) holdings being $11,201.5 million.

Official figures for the week ending February 14, 2025, show that the central bank’s liquid foreign exchange reserves rose by $35 million to $11,201.5 million.

Commercial banks maintained net foreign reserves of $4,746.4 million during the period under review, according to the breakdown of foreign reserves.

The nation’s total liquid foreign reserves as of the week ending February 07, 2025, were $15,862.6 million.

Of these, the central bank held $11,166.6 million in foreign reserves, while commercial banks kept $4,696 million in net reserves.